The UK formally exited the European Union on the 31st January and the talks have now moved on to the second stage of the negotiations which covers the future trading relationship.
The UK is currently trying to negotiate a free trade agreement with the European Union that will come into force after the end of the transition period (31st December 2020).
The GBCC is here to help and will continue to provide businesses with Brexit related support and services in the run-up to the end of the transition period and beyond.
The end of the transition period will bring significant changes to the ways in which businesses trade with the European Union. We have outlined below some practical steps that businesses should take to prepare for these changes in 2021.
Please note that this information does not constitute legal advice and there may be further aspects or steps specific to your business or industry which you may need to consider.
Prepare to make customs declarations
✓ Understand customs declarations and whether you will be required to complete them.
✓ Consider making use of the HMRC Customs Intermediary Grant Scheme to help prepare your business for making customs declarations
✓ Decide whether to appoint a Customs Intermediary (such as a customs broker or freight forwarder) to manage responsibility for fulfilment of key paperwork and requirements on your behalf
✓ Ensure you have your GB EORI number or EU EORI number (for those businesses making customs declarations or needing customs decisions in the EU)
✓ Check here to see if you can delay making a full customs declaration on goods imported from the EU for up to 6 months after import. This will be made available for a limited time only until July 2021 and you (or your customs intermediary) will require authorisation.
Prepare to pay import VAT and customs duties
✓ Consider using Postponed VAT accounting which will allow you to account for import VAT on your VAT return
✓ Apply for a duty deferment account here if you import regularly or wish to defer payments. This enables customs charges including customs duty, excise duty, and import VAT to be paid once a month through Direct Debit instead of being paid on individual consignments
✓ Find out the correct commodity code for your goods here so you will be able to calculate the rate of duty and import VAT you will need to pay. You can use the government’s UK Global Tariff tool here to check the duty rates that will apply from 2021 to the goods you import from countries that the UK does not have a trade agreement with.
Understand your obligations relating to the delivery of the goods
✓ Familiarise yourself with the different International Commercial Terms (Incoterms) rules which are used to clarify whether the buyer or the seller is responsible for the shipment & costs involved in delivering the goods (customs procedures, duties & tax, insurance etc)
Transporting the goods across the border
✓ Ensure you have the correct International Driving Permits if you are directly responsible for the transport of goods across the GB-EU border
Exporting goods to the EU on a temporary basis (e.g. for trade shows)
✓ Familiarise yourself with ATA Carnets if you are looking to move goods into the EU on a temporary basis without having to pay duties
Moving controlled or restricted goods between the UK & the EU
✓ Check here whether you need to apply for a license or certificate to bring in goods from the EU or export them to the EU from 2021
If the UK is unable to agree a trade deal with the EU then the UK will revert to trading with the EU on WTO rules. Trading on WTO rules means that countries cannot discriminate between trading partners and must offer the same trading terms to all other WTO member states.
The only exceptions to this are where free trade deals have been agreed and that states are allowed to apply preferential treatment to products arriving from developing countries.
Key characteristics of WTO rules are:
A free trade deal is an agreement between two or more countries to provide preferential access to each others markets that goes beyond World Trade Organisation (WTO Rules). Trade deals typically involve negotiations over:
It is worth bearing in mind that even with extensive free trade agreements (such as the CETA trade deal between the EU and Canada), businesses are still required to:
The UK government will introduce new border controls on imports coming into Great Britain from the EU in three stages up until the summer of 2021. This phased approach will be implemented regardless of whether a free trade deal is agreed with the EU or not.
The three stages are as follows:
The UK Global Tariff sets out the new post-Brexit tariff regime which is scheduled to come into effect from the 1st January 2021. It will replace the EU’s Common External tariff and will apply to imported goods from countries which trade with the UK on WTO terms.
Northern Ireland will remain a part of the UK customs territory after the transition period ends but will continue to apply EU customs rules and procedures at its ports to avoid the need for customs checks at the Irish border.
Whilst we are still awaiting the full details, this will result in a range of new processes and checks that businesses need to be aware of when moving goods between Great Britain and Northern Ireland.
3 Months to Go - Brexit and UK Trade
The Chamber's director of policy and strategic relationships Henrietta Brealey and Pinsent Masons' legal director David Thorneloe discuss all things Brexit, with three months to go until the end of the transition period.